This case concerns a
contract for the sale of Henderson, Nevada, real property. Under the contract,
the close of escrow was conditioned on the buyer obtaining commercial
subdivision approval with respect to the land. After the parties worked
unsuccessfully for approximately three years to obtain the commercial
subdivision approval, the sellers, without any warning to the buyer, repudiated
the contract and refused to consummate the sale. In the ensuing action
instituted by the buyer against the sellers and his real estate agent, who
ultimately settled with the buyer, the district court granted specific
performance to the buyer and awarded him costs.

In this appeal, we
consider whether a party’s performance under a contract must be completed
within a certain time when the contract’s terms do not make the time for the
party’s performance of the essence. We conclude that when a contract does not
make the time for a party’s performance of the essence, either party can make
it so by setting a reasonable time for performance and notifying the other
party of an intention to abandon the contract if it is not performed within
that time. Further, absent such a demand for performance, or a term making
time of the essence, a contract must be performed within a reasonable time.
What constitutes a reasonable time for a contract’s performance is a question
of fact to be determined based on the nature of the contract and the
circumstances surrounding its making.

We also consider in
this appeal the circumstances under which a party to a contract may waive a
condition precedent to his performance so that he can complete his performance
under the contract. We conclude that when a contract contains a condition
precedent to a party’s performance, that party may waive the condition and
tender performance so long as the parties included the condition in the
contract for the sole benefit of the party seeking to waive the condition and
complete performing his contractual obligations. Whether a condition included
in a contract is for the benefit of one or both parties is a question of fact.

Finally, we consider
whether costs should be apportioned when one party sues multiple defendants on
similar claims based on the same set of facts. We conclude that in such a
situation, it is within the district court’s discretion to determine whether
the claims are so intertwined as to render apportionment impracticable, but before
declaring apportionment impracticable, the district court must make a good faith
effort to apportion costs. In light of those considerations, we affirm the
district court’s judgment granting specific performance to the buyer. In
particular, the sellers did not provide the buyer a reasonable time to complete
his performance under the contract, and although the buyer failed to obtain the
commercial subdivision approval—a condition precedent to the buyer’s
performance—that condition was included in the contract solely for the buyer’s
benefit so he was free to waive it and complete performance by tendering the
down payment. Nevertheless, because the record in this case does not reveal
that the district court made an effort to apportion costs, we reverse its award
of costs and remand for further proceedings consistent with this opinion.

FACTS AND
PROCEDURAL HISTORY

In 1999, appellants
Seaynoah and Helen Mayfield entered into a contract with Satsoy Thay for the
sale to Thay of a parcel of land in Henderson, Nevada. Thay subsequently
assigned the contract to respondent Ray Koroghli. Koroghli hired real estate
agent Ellen Ross to make an offer on the property on his behalf and to
represent him in the transaction with the Mayfields. The 1999 contract expired
by its own terms after four extensions. Soon after that contract expired, the
parties entered into a second contract, on January 5, 2000. The second
contract provided for a purchase price of $10 per square foot of “net usable
acreage,” with the final price to be calculated after realignment of roadways.
The purchase was to be seller financed, with a $1.3 million down payment,
secured by a deed of trust for the balance, payable in quarterly installments
over 20 years. The second contract also provided for the close of escrow 60
days from the date that Koroghli obtained commercial rezoning and approval for commercial
subdivision of the property. The parties included the commercial subdivision
condition in the second contract on Koroghli’s insistence, to ensure that he
could use the property in the manner he expected. Other than noting that
escrow would close 60 days after Koroghli obtained commercial rezoning and
subdivision of the property, the second contract did not specify a date by
which performance was to occur, nor did it contain a clause declaring time of
the essence.

Koroghli retained an
engineer, and the parties worked together to obtain rezoning and approval for
commercial subdivision of the property. On September 5, 2000, the Henderson
City Council rezoned the property. However, by early 2001, the property had
still not been approved for commercial subdivision. Koroghli offered to waive
the commercial subdivision condition and close on the property. Mr. Mayfield
declined to close at that time, insisting that he would assist in obtaining all
of the property that the parties anticipated would be added through expected
road vacations, road realignments, and a land trade with the City of Henderson. Over the next two years, the parties worked on these issues and Koroghli
retained engineering, architectural, and public relations entities to assist in
developing the property.

On February 26, 2003,
three years after the Mayfields and Koroghli entered into the second contract, Mr.
Mayfield, without providing Koroghli notice or a reason, repudiated the
contract and refused to sell the property to Koroghli. In response, Koroghli
sent Mr. Mayfield a letter indicating that he was “ready, willing and able” to
perform, and demanding close of escrow. Mr. Mayfield refused to perform.

Koroghli filed suit
against the Mayfields seeking specific performance and against Ross alleging
breach of contract and breach of fiduciary duty. The Mayfields asserted cross-claims
against Ross. Both Koroghli and the Mayfields reached out-of-court settlements
with Ross, and she was dismissed from the case. Following a bench trial, the
district court concluded that the Mayfields had breached their contract with
Koroghli and that Koroghli was entitled to specific performance. The court
found that because the contract did not contain a date by which Koroghli was to
obtain commercial subdivision or a clause making time of the essence, the Mayfields
were obligated to fix a reasonable time for performance of this condition and
communicate that time to Koroghli before they could declare him to be in
default. The district court concluded that because the Mayfields did not so
notify Koroghli, their repudiation constituted a breach of the contract. The
court therefore awarded specific performance to Koroghli. The court also
awarded Koroghli costs totaling $52,690.91. This appeal followed.

DISCUSSION

On appeal, the
Mayfields assert that the district court’s grant of specific performance was
improper because (1) the Mayfields were not required to make a demand on
Koroghli to perform by a certain date, and the passage of three years exceeded
a reasonable time for performance; and (2) Koroghli did not and cannot tender
performance according to the terms of the contract. The Mayfields argue
further that the district court erred by awarding costs to Koroghli because the
costs should have been apportioned between those incurred in pursuit of claims
against the Mayfields versus those incurred in pursuit of claims against Ross.

We review the
district’s court’s decisions to grant specific performance and to award costs
for an abuse of discretion.[1]

Because time was not of the essence in the parties’ contract,
the Mayfields were required to allow Koroghli a reasonable time in which to
perform his obligations under the contract

The Mayfields argue
that a demand for performance is not necessary unless it is required by the terms
or the nature of a contract and that, even if a demand is required, an
exception exists when it is apparent that a demand would be unavailing or
constitute a useless formality. The Mayfields argue that they were not
required to demand performance from Koroghli because doing so would have been
futile, since, if Koroghli intended to perform, he would have done so by
February 2003.

Although not
previously recognized by this court, a fundamental principle of contract law is
that the time for performance under a contract is not considered of the essence
unless the contract expressly so provides or the circumstances of the contract
so imply.[2] If time is not of the essence, the parties generally must perform
under the contract within a reasonable time,[3] which “depends upon the nature
of the contract and the particular circumstances involved.”[4] Nevertheless,
in the absence of a clause making time of the essence, a party’s failure to
perform within a reasonable time generally does not constitute a material
breach of the agreement.[5] But when a contract does not make time of the
essence, one party to the contract may make it so by demanding performance by a
certain date or time, so long as the party “fix[es] a reasonable time for the
completion of the contract and giv[es] notice to the other party of an
intention to abandon the contract unless it is completed within the specified
time.”[6] In so doing, the time for a party’s performance becomes a material
term of the contract, so that the failure to perform by the time specified
usually constitutes and has the legal effect of a material breach.[7] Of
course, it would be futile for a party to make a demand “if the other party has
repudiated the contract or otherwise indicated [he] refuses to perform.”[8]

The contract between
the Mayfields and Koroghli did not expressly make time of the essence. Nor did
the circumstances surrounding the making of the contract indicate that the
parties intended performance by a certain date to be an essential part of the
bargain. Indeed, the parties worked together over a period of three years to
complete the transaction. Also, Mr. Mayfield declined Koroghli’s offer, made
approximately one year after the parties entered into the contract, to waive
the commercial subdivision condition and close the deal. At that time, Mr. Mayfield
told Koroghli that he wanted to ensure that Koroghli received the deal for
which he had bargained.[9] Based on the terms of the contract and the parties’
behavior and representations, we must conclude that time was not of the essence
in their contract.

The Mayfields were
entitled to make time of the essence after the formation of the contract by
setting a reasonable time for Koroghli’s performance and by communicating that
deadline to Koroghli. But the Mayfields did not make such a demand. Had they
made such a demand for performance which allowed a reasonable time to close
escrow, the Mayfields would have had the right to abandon the contract if
Koroghli failed to perform by the stated date. Although they claim they did
not make a demand because doing so would have been futile, we reject that
contention. Koroghli did not repudiate the contract or otherwise indicate that
he did not intend to perform under it. Rather, as the district court found,
Koroghli diligently proceeded toward obtaining subdivision approval. Therefore,
the Mayfields were not excused on grounds of futility from demanding
performance. We thus discern no abuse of discretion in this finding, and we
conclude that, because the Mayfields did not demand performance and were not
excused from doing so on grounds of futility, time was not of the essence in
their contract with Koroghli.

Because time was not
of the essence, the Mayfields were obligated to allow Koroghli a reasonable
time for performance and were not excused from performing under the contract
unless Koroghli failed to perform within a reasonable time. The Mayfields
argue that the passage of three years exceeds a reasonable time for performance
and, therefore, their repudiation was justified. We disagree.

Whether a reasonable
time for a contract’s completion has passed is determined by the nature of the
contract and the circumstances surrounding its making.[10] Here, although the
district court did not make express findings in this regard, it is apparent
from the record that a reasonable time for performance had not yet expired.[11]
Specifically, the record demonstrates that the Mayfields and Koroghli agreed to
enter into a contract for the sale of undeveloped, commercial property. The
parties were both experienced in transactions of this kind and were aware of
the myriad development and zoning permits necessary to develop the land as
agreed. Mr. Mayfield worked alongside Koroghli to obtain the requisite
permits and approvals during the three-year period, which he now complains was
unreasonable. At no point during those three years did the Mayfields express
impatience or frustration as to the length of time that had passed. We
conclude that under the circumstances of this case, the passage of three years
after the parties’ formation of the contract did not exceed a reasonable time
for performance. It follows, therefore, that the Mayfields’ repudiation was
not excused and constituted a breach of the contract.

Koroghli tendered performance when he offered to waive
the commercial subdivision condition and close on the contract at the time of
the Mayfields’ repudiation

The Mayfields argue
that the district court’s grant of specific performance was an abuse of
discretion because Koroghli did not tender performance, which is a prerequisite
to a grant of specific performance. Specifically, the Mayfields contend that
Koroghli cannot tender performance according to the terms of the contract
because the commercial subdivision requirement has not been fulfilled.

We have previously
held that specific performance is available only when: “(1) the terms of the
contract are definite and certain; (2) the remedy at law is inadequate; (3) the
appellant has tendered performance; and (4) the court is willing to order
[specific performance].”[12] If a purchaser of real property has not yet
tendered the purchase price, the district court may still grant specific
performance if the purchaser can “demonstrate that she is ready, willing, and
able to perform.”[13] There is no dispute that, at the time Mr. Mayfield
repudiated the contract, Koroghli offered to tender the agreed-upon purchase
price and close escrow. Koroghli thereby adequately demonstrated that he was
ready, willing, and able to perform. The Mayfields assert, however, that
Koroghli’s purported tender of performance was deficient because the commercial
subdivision condition was never fulfilled. They further argue that Koroghli
did not have the right to unilaterally waive the commercial subdivision
condition because it was for the benefit of both parties. We disagree.

A party may waive a
condition in a contract if the condition was included in the contract for his
or her benefit.[14] Whether a particular condition is for the benefit of one
or both parties is a question of fact.[15] Such a determination involves
examination of the facts and circumstances of the particular case as well as
the language of the contract at issue.[16] “The test is whether the condition
was intended by both parties to be included in the contract for the benefit of
both parties, not whether the condition was in fact of a benefit to both
parties.”[17]

In this case, the
district court found that the commercial subdivision condition was included at
Koroghli’s request to ensure that the property could be used in the manner
expected by Koroghli. The district court based that finding on Mr. Mayfield’s
testimony that the parties’ added the condition at Koroghli’s request. We
determine that the district court did not abuse its discretion by finding that
the parties included the commercial subdivision requirement in the contract solely
for Koroghli’s benefit. Although the Mayfields argue now that the condition could
have benefited them because, if satisfied, it would make the property more
valuable in case Koroghli defaulted on his financial obligations under the
contract, the proper inquiry focuses on the parties’ intent in adding the
condition at the time of contracting.[18] That the condition may have later
benefited the Mayfields is inapposite. Because the parties included the condition
at the time of the contract solely for Koroghli’s benefit, Koroghli could
unilaterally waive it. His offer to waive the condition and tender performance
of the purchase price at the time of Mr. Mayfield’s repudiation was thus
satisfactory proof that he was ready, willing, and able to perform. The
district court did not abuse its discretion by granting specific performance to
Koroghli. We therefore affirm the district court’s judgment granting specific
performance.

The district court must attempt to apportion the costs
incurred in litigating against Ross and the costs incurred in litigating
against the Mayfields

The Mayfields argue
that the district court erred by failing to apportion the costs awarded to
Koroghli between those incurred in pursuit of claims against the Mayfields
versus costs incurred in pursuit of claims against Ross before she settled with
the parties. The Mayfields argue that the award of costs should be reduced by
50 percent since Ross was dismissed from the action after much of the
litigation had already taken place. Koroghli argues that apportionment is
impracticable and not required when claims pursued against multiple parties are
substantially intertwined, as were his claims against the Mayfields and Ross.

We have not
previously considered the propriety of apportioning costs when the prevailing
party pursued similar claims, based on the same factual circumstances, against multiple
defendants. The California Court of Appeal faced a similar problem in Abdallah
v. United Savings Bank.[19] In Abdallah, the court affirmed an
award of attorney fees to the prevailing party in an action in which fees were
authorized for only one of three claims pursued. The court explained that apportionment
was not mandatory in such an instance, as the district court could reasonably
have concluded that the claims were so “‘inextricably intertwined’”[20] as to
make it “‘impracticable, if not impossible, to separate the multitude of
conjoined activities into compensable or noncompensable time units.’”[21] We
adopt the Abdallah court’s reasoning and hold that, in an action in
which a plaintiff pursues claims based on the same factual circumstance against
multiple defendants, it is within the district court’s discretion to determine
whether apportionment is rendered impracticable by the interrelationship of the
claims against the multiple defendants. The district court must, however,
attempt to apportion the costs before determining that apportionment is
impracticable. When attempting to apportion costs, the district court must
make specific findings, either on the record during oral proceedings or in its
order, with regard to the circumstances of the case before it that render
apportionment impracticable.

In this case, the
district court found that Koroghli’s claims against the Mayfields and Ross were
so intertwined that apportionment was impracticable. However, the record does
not reflect that the district court attempted to apportion the costs before
making its finding. We therefore reverse the award of costs to Koroghli and
remand this matter to the district court for it to consider the practicability
of apportioning costs.[22]

CONCLUSION

We affirm the
district court’s judgment granting specific performance because the Mayfields
were not excused from performing under the contract and Koroghli showed that he
was ready, willing, and able to perform. However, we determine that the
district court abused its discretion by failing to attempt to apportion the
costs Koroghli incurred while litigating against the Mayfields from those costs
he incurred while litigating against Ross. Accordingly, we reverse the award
of costs to Koroghli and remand this matter to the district court for it to consider
apportionment of any costs awarded to Koroghli consistent with the rule adopted
in this opinion.[23]

[22] We note that a
disparity exists between the amount of costs awarded by the district court at
the hearing on the Mayfields’ motion to retax and settle costs—$51,629.09—and
the amount of costs listed in the judgment on costs—$52,690.91. The district
court should rectify this inconsistency on remand.

[23] Having considered all
of the Mayfields’ contentions, we conclude that their remaining arguments lack
merit.